renaissance risk changing the odds in your favour future implications of treating the effect, rather...
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Renaissance Risk
Changing the odds in your
favour
Future implications of treating the effect, rather than the cause
Renaissance Risk
Changing the odds in your
favour
Cyclical nature of the industry causes volatility in profitability
Dependent upon market demand = world economy
Terrorist attacks could lead to further instability
Substantial global operations exposed to political risk
Growth depends on continued increase in demand
Intense competition may lead to reduced opportunities
Loss of key customer could result in a significant loss
Tanker industry is subject to substantial regulation=expense
M&A may lead to unsuccessful integration or few benefits
Growth may strain infrastructure
Insurance may not be sufficient to cover losses
Incident may damage reputation
Significant financial exposure on new builds
Exposure to currency exchange
Tax changes in domicile
Renaissance Risk
Changing the odds in your
favour
Renaissance Risk
Changing the odds in your
favour
Renaissance Risk
Changing the odds in your
favour
Renaissance Risk
Changing the odds in your
favour
Gain
Train
Retain
Renaissance Risk
Changing the odds in your
favour
Gain Over-regulation Lack of reputation & understanding Demographics & attractive alternatives
Train Reduced number of training berths Barriers to promotion
Retain Criminalisation Port security Administration & regulation
Renaissance Risk
Changing the odds in your
favour
Poaching & Upgrading
LNG
Substandard
Renaissance Risk
Changing the odds in your
favour
Regulation, reputation & demographics drive out seafarers
Experience base unable to keep pace with size of fleet
Increased human error leads to more incidents
Politicians, Regulators & Public act to ‘eliminate error’
Renaissance Risk
Changing the odds in your
favour
$
Manning
EnvironmentShareholder
Renaissance Risk
Changing the odds in your
favour
0%
20%
40%
60%
80%
100%
120%
140%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Lo
ss
ra
tio
Hull
Cargo
Renaissance Risk
Changing the odds in your
favour
Why is premium low when no insurer consistently makes a profit?
Why is new capacity coming into an unprofitable market?
4
4.5
5
5.5
6
2003 2004 2005
Year
$ p
er
Dw
t
Renaissance Risk
Changing the odds in your
favour
Source: Munich Re
Renaissance Risk
Changing the odds in your
favour
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
AAA AAA- AA+ AA AA- A+ A A- BBB
S&P Rating November 2006
S&P Rating November 2001
Renaissance Risk
Changing the odds in your
favour
Exposure Units
Severity
Premium
Self Insured retentions
Captives
Mutuals
Mergers &Acquisitions
Renaissance Risk
Changing the odds in your
favour
Renaissance Risk
Changing the odds in your
favour
Manning shortage
Lower level of competency
Increased number of ‘substandard’ vessels
Increased number of accidents
Increased insurance premium rate
Cost cutting? Placement at reduced security
Placement with less D&O protection
Renaissance Risk
Changing the odds in your
favour
Renaissance Risk
Changing the odds in your
favour
Generic task Nominal human unreliability
Complex task One in six
Fairly simple, performed rapidly One in eleven
Routine, highly practised One in fifty
Completely familiar, highly practised, performed to highest standards by motivated staff
One in two-thousand
Renaissance Risk
Changing the odds in your
favour
Condition Multiplying factor
Information overload x6
Mismatch between perceived and real risk
x4
Operator inexperience x3
Incentive to shortcut procedure x2
Boredom / Fatigue x1.1
Management factors X0.1 to x100
Renaissance Risk
Changing the odds in your
favour
Renaissance Risk
Changing the odds in your
favour
Long term solution requiring common goals, collaboration and understanding, not more red tape, administration and regulation.
Cooperation in determining the major contributors to risk and cost-effective risk reduction – a circle of maritime responsibility.
A solution based on assessed safety and reduced risk, rather than being prescriptive.